AI startups inflate ARR with non-GAAP CARR metrics
vc-backed ai startups are using non-audited 'committed arr' to misleadingly inflate revenue figures by up to 70%.
spellbook ceo scott stevenson ignited industry debate by calling out ai startups for padding revenue numbers using 'committed arr' (carr) instead of standard annual recurring revenue. over a dozen vcs and founders confirmed this practice is widespread, allowing companies to claim double or triple their actual cash revenue by including undeployed contracts. this distortion pressures competitors to match inflated metrics and misleads journalists, despite gaap rules excluding such future revenue.